Pension Contribution & Tax Query

zagfles

It is salary sacrifice? You need to compare two consecutive payslips and see how the gross taxable changes. Does it change by salary + overtime etc, or salary+overtime-pension? Even if the former, what does salary look like on the payslip? Is it your monthy salary or is the pension already deducted from it?

Also check your pension statements. Do they show a tax rebate from HMRC?

watchingthepennies_2

Thanks zagfles, no I don't have salary sacrifice. Payslips show salary + bonus = taxable, and the taxable hasn't reduced with pension payment. Pension statements do include the 20% tax rebate.


I've been completing the return online and the questions are worded slightly differently, so for this one -
Did you make contributions towards a personal pension or retirement annuity? This does not include payments you make to your employer's pension scheme, which are deducted from your pay. Initially I answered 'no'.


But on reading the notes carefully it isn't as cut and dried as that - so really I should be answering 'yes'.
Contribute to personal pension or retirement annuity

Payments deducted from your pay before it's taxed (the net pay arrangement) - if your payments to your employer's occupational pension scheme (or any associated Additional Voluntary Contributions) are deducted from your pay before it's taxed you will already have received your tax relief. Do not enter anything on this tax return.


On answering 'yes' I then get the next questions as stated in the OP:


Payments to your employer's scheme which were not deducted from your pay before tax: Enter figure paid but not grossed up.
Seems logical that as this is what has happened I would put my contribution in here but that is contradictory to the advice above which is why I am getting confused.

zagfles

Not sure, maybe that box is for contributions made to your employer's scheme which doesn't claim tax relief at source, so putting it in there would be wrong.

I'd imagine Jem is right, it will certainly get the numbers right anyway as it's a RAS scheme (ie one which claims 20% relief direct from HMRC)

jem16

watchingthepennies wrote: »

Thanks zagfles, no I don't have salary sacrifice. Payslips show salary + bonus = taxable, and the taxable hasn't reduced with pension payment. Pension statements do include the 20% tax rebate.

Looks like your work is using a Relief at Source (RAS) scheme.

I've been completing the return online and the questions are worded slightly differently, so for this one -
Did you make contributions towards a personal pension or retirement annuity? This does not include payments you make to your employer's pension scheme, which are deducted from your pay. Initially I answered 'no'.


But on reading the notes carefully it isn't as cut and dried as that - so really I should be answering 'yes'.

It should be "Yes". This is usually Box 1.

The statement about payments made to your employer's scheme usually refers to those paying pension contributions from gross pay before tax is calculated. This doesn't apply to you as you are paying after tax is calculated.

Contribute to personal pension or retirement annuity

Box 2 usually refers to a Retirement Annuity Contract. This is an old style of pension and you do not have that. Contributions were always made to the pension gross and you then applied to HMRC for tax relief.

Payments deducted from your pay before it's taxed (the net pay arrangement) - if your payments to your employer's occupational pension scheme (or any associated Additional Voluntary Contributions) are deducted from your pay before it's taxed you will already have received your tax relief. Do not enter anything on this tax return.

This would be the case for all occupational pensions where contributions are paid from gross pay. This isn't yours.

Payments to your employer's scheme which were not deducted from your pay before tax: Enter figure paid but not grossed up.

This is usually for people such as those in Public Sector schemes whose main contribution comes from gross pay but they then make a lump sum AVC which is paid gross. Again this does not apply to you.

Seems logical that as this is what has happened I would put my contribution in here but that is contradictory to the advice above which is why I am getting confused.

Your contribution should be entered into Box 1 as, although it's an occupational scheme, it's treated like a Personal Pension as you pay into it from net pay and the pension provider adds on basic rate tax relief. Your scheme may be a Group PP or a stakeholder.

These notes may help you - see Page TRG 18.

http://www.hmrc.gov.uk/worksheets/sa150.pdf

watchingthepennies_2

Thank you both, very helpful.
Jem you've hit the nail on the head with Group PP, I hadn't thought of this any differently than an employers scheme but I can see how this works now.